Consequences

July 23, 2013

Almost no one denies that there were serious problems with getting sufficient access to health care services when the president’s Patient Protection and Affordable Care Act, frequently referred to as “Obamacare,” took over the political scene. The consequences of not addressing these problems were dire, we were told, and something needed to be done. There was much criticism from all sides about the solutions offered, and the willingness of one side to negotiate and compromise with the other. While the Democrats promised us that the results of this secret bill, the details of which we couldn’t see until it was passed, would be wonderful, Republicans, Libertarians, and the pundits who promote their ideas, spent most of their time criticizing Obamacare rather than explaining how their own proposed solutions would help the common American subject.

It seemed that the politicians and the media were not interested in clarifying the issues and looking for real solutions. What is insurance, and what are some ways we can provide access to those who cannot afford it? How do we address the problems of insurance monopolies within states and other factors that drive up the cost of obtaining health care? How do we address the problems of those who lose their insurance, and then cannot obtain new insurance due to pre-existing conditions? Ideas compatible with Distributism were not considered. Ideas like medical guilds to lower the cost of medical education and practice insurance, removing boundaries stifling charitable services and less expensive alternative treatments, taking steps to eliminate insurance monopolies and reform the rewards given in law suits which drive up the cost of insuring a medical practice, and having policies obtained through employment be with the insured so that changing your job didn’t mean changing your insurance.

The problem with rushing solutions into law without truly considering the potential consequences is that the result can sometimes have consequences that are the opposite of the law’s intention. For example, if you make a law assuming that everyone impacted will act in a moral way, and will follow the law’s intent–rather than its letter–you are neglecting the sad fact that there are people in the world who will do the opposite of what you intend, and you are often ignoring the warnings of people telling you that these unintended consequences will happen.

In the end, Obamacare was passed into law. One of the intentions of the law was to extend health benefits to at least some part-time workers. We are now seeing the result of this decision.

Some may still question that this outcome was predictable, but even the government knew it would happen. In fact, the impact of the law was large enough that the government has exempted many companies from the law’s requirements. However, it should be noted that the actions of these companies is not illegal. The law does not mandate that hours cannot be reduced in order to avoid extending the coverage. (I am not claiming that it should have done so, but did the writers of this law not consider that this would happen?)

Some may argue that the reduction in worker hours was and is avoidable, but, in many cases, it is not. Many large companies with part-time workers would be able to afford extending health benefits to these workers, but it would mean fewer profits. What is not commonly understood about companies whose stocks are traded on the market is that the executives are usually contractually required to take actions to maximize profits. This actually forces management to do certain things even if the managers themselves personally oppose those actions, as long as those actions don’t violate the law. Failure to do them can not only result in the loss of their jobs, but they can even be sued in some cases.

In this current situation, these executives must look at all options, even awful ones, and take the one that will result in the best return for investors. If the number of hours requiring health benefits is reduced from 40 to 30 hours per week, then the executives of these companies are required to reduce the hours of those part-time employees who currently work 30 or more hours. In other words, not only will these part-time employees still not get health care coverage from their employers, they will also be earning less money on which to live and with which to pay for any needed health care.

Add to this the current revelations that the cost of health care premiums will increase in 2014. The Obama administration contends that tax credits will offset the increases, but when will employers and employees see those credits? Will they have to pay for the policies, and the increased taxes on the premiums, up front, and then only get the credit when they submit their tax forms? If so, then it is fair to say that the costs are increasing for small businesses and employees because they will have to bear the burden of those costs until they are finally given the credit with their taxes. Now, to be fair, the CBO claims that the cost to many will actually be less due to the subsidies that will also be implemented. However, that is apparently only true in certain cases and only for the insurance exchanges. There are some reports that the same CBO estimates 43% of the people who buy on the exchanges, or individual markets outside of them, won’t be eligible for these subsidies.

Some argue that this was the intention all along, to force large employers to do something that would be unpopular and increase the popularity and the necessity of having an all-powerful government to come to the rescue, to force them into government managed insurance exchanges even if it ruins the economy. Others argue that this shows the heartless greed of the big companies who are unwilling to cut into profits even if it hurts employees. I believe both views are correct. These are part of the very nature of our political and economic environment where the mass of common citizens are viewed as mere pawns in the struggle for greater wealth and power by the few who control productive capital and government. These are natural consequences of removing the idea of solidarity from economic and political life, of forgetting that economics and politics are merely sub-fields of ethics, and therefore cannot be separated from it without harming people and society.

Some companies actually try to justify breaking the law in order to maximize profits. If it costs a company $3,000 to maintain insurance coverage for its employees, but the fine for eliminating that coverage and sending the employees to the government exchange or get a personal policy is only $2,000, then they will choose the option with the least cost to the company without regard to the consequences to the employees. Sadly, the arguments of some so-called conservative pundits act as though this is a natural consequence of the law, rather than the immoral decision of the companies which could afford providing the insurance even though it would cut into profits.

Some will argue that it is too late to do anything about it, but we can always argue and fight to change what should be changed. There are better options. Even though we will have to endure the consequences of the laws currently in place, we can still present better options and work to have them considered and implemented. We can let the politicians and business leaders know that we are not satisfied with what they are doing and the way they are going about it. We can still have an effect.

David W. Cooney
David W. Cooney is the editor of Practical Distributism. His articles have appeared in GILBERT and David is also a contributing author to the book, The Hound of Distributism and the author of Distributism Basics: An Explanation. Originally from Southern California, David now lives with his wife and two children in Washington State where he works as a network administrator.

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7 Comments

This discussion is already going the way of the typical attitude in this country. That is the problem of democracy. As soon as people realize they can vote themselves into prosperity by regulating those that produce then all is well for them and who cares if it affects you. Mary gets a good deal because now she pays less, she likes the program. Others pay more than they used to or way more than they used to, others disagree with Mary. The argument is circular because the premise that govt. forcing employers to provide health insurance or the govt. provides the insurance is determined to be the good. The whole purpose of the ACA is to eventually collapse the employer health benefit system and move to a single payer system as employees who have been formed under the idea that the employer should provide insurance as part of a wage get fed up with the evil employers avoiding the payment of benefits as defined by the ACA. Don’t think that anything would improve under a single payer system as insurance companies only exist to make profits and our system is reliant on spreading risk over all insured. Businesses will still be heavily taxed to support a single payer system as they are the producers and the govt. is the distributor. In the end all businesses/owners will pay far more for a single payers system since there will be no part time/full time distinction on the contribution of producers.

Some people are going to get a reduction in price. I don’t deny that this is good. However, as I pointed out in the article, this price reduction only applies to those who qualify for the subsidies built into these exchanges and, according to the CBO, 43% of those on the exchanges won’t qualify. This is far from what was promised by those who advocated this law.

It is certainly true that companies have limited hours in the past to avoid having to provide insurance coverage. However you seem to have missed my point, which was that the law was changed specifically to provide coverage for some part-time employees. Previously, full-time employees got coverage, and part-time employees did not.

Now, because the law has reduced the number of hours from 40 to 30, those part-time people who used to work 32.5 hours a week will have their hours reduced. They still won’t get coverage provided by their employers, and they will have less money with which to comply with the government mandate that they have insurance.

The intention was to provide these people with insurance through their employer and the result was tha they still don’t have it and they have less money due to their reduction in hours. This cannot be argued. It is being done openly.

I don’t know … I think it really will depend on what state you live in, and what your state has done to implement the law. For my family, our children have received health care through a state program because the company my husband works for is too small to offer coverage, and I am self employed. For my husband and I to purchase insurance for ourselves, we would have to pay an extremely high rate, for basically catastrophic insurance. Meaning, yes, it would make sense if we got hit by a bus, but otherwise, we are better off putting the money in a mattress. Oregon has a website where you can enter your information and see what you will pay… and when I did that I did a freaking happy dance because — it is a reasonable amount of money to pay each month! And, it is actually going to be decent coverage. And best of all, it is not tied to a job. So now we are free to work without the *fear* of having to find good insurance.
Now you are saying that these companies are limiting workers hours to not have to insure them, but please. They have been doing that since forever. In California, where this same law has been in effect, it is not uncommon to work 32.5 hours a week… just up to the limit where you won’t have to be insured by the company. This is not really new… And personally, I’d rather my insurance not be tied to my employment.

” but did the writers of this law not consider that this would happen? ”

I believe they did. Some unintended consequences have come so often, I can’t see how they didn’t. So were I asked, I would say, “They knew it would happen and it allows them to pass a law claiming to solve a problem while simultaneously showing opponents of the law how they will never actually have to comply with portions of it.

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